Pros and cons of joint checking accounts

February 9th, 2011 Todd Means

One of the biggest decisions you and your new spouse will have to make when it comes to your financial lives is deciding how you want to manage your money. Will you:

  1. Establish a joint account that is used by both you and your spouse?
  2. Continue to manage your own individual accounts?
  3. Or establish a combination, where you have one joint account but continue to manage your own individual accounts separately.

Remember that there is no right or wrong answer to this question. Every couple’s financial situation is unique, and as a result there is no cookie cutter solution for managing your money as a couple.

Sit down with your partner and have an honest discussion about each of your goals when it comes to your financial lives. What are your spending habits? Is one person going to be in charge of paying the bills, or will it be a joint effort? What impact does your debt load have on your spouse?

Once you’ve established the financial picture between you and your partner, determine what option will work best for you. We’ve put together some advantages and disadvantages for you to consider.

Advantages of joint bank accounts

  • One of the biggest advantages of joint bank accounts is that all the money is in one pot. This is convenient for depositing money, writing checks, paying bills and balancing your account.
  • Having joint accounts will also make it substantially easier to budget. One account will allow you and your partner to see how much money is being deposited, spent and used for bills.
  • Another advantage is that both partners will have the ability to deposit or withdraw money and pay bills. This is convenient because each person can perform individual functions at his or her convenience.
  • A joint account will enable you to save faster. When you’re placing money from both your incomes into one account, as opposed to two separate accounts, you’re putting a larger sum into your savings, which means you will earn more on interest.
  • If you or your spouse were to pass away, rights of survivorship would allow money to be transferred to the second owner without having to go through probate.

Disadvantages of joint bank accounts

  • One disadvantage of a joint account is that it could place the burden of managing your finances on one partner, instead of both.
  • Either you or your partner may have some concerns with privacy. A joint account will make all money matters transparent. There are no secrets. For example, if one person is buying a gift for the other, the transaction can be viewed by the other due to the joint status.
  • Another disadvantage of a joint checking account is that both you and your spouse have access to the bank account and either can withdraw or deposit without telling the other. An example of a problem would be one co-owner withdrawing money from the account, creating an overdraft situation, which would incur costs for both parties.
  • Finally, if a problem arises in the relationship, it can affect the joint account. For example, one person can withdraw all the money and leave a zero balance.

If you or your partner have had credit or debt issues in the past, your spouse may be impacted negatively if you establish a joint account. Make sure you are aware of these implications before you make your decision.

Regardless of which option you and your spouse select, make sure you continue to communicate about financial matters in an honest manner.

Member FDIC

Todd Means

About the author

Todd Means is a Vice President at MidWestOne Bank. He works in the retail department, specializing in checking and savings accounts, consumer loans, auto loans and home equity loans.

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